A reverse mortgage allows eligible homeowners to convert the equity in their homes into a steady stream of income. Married couples can take out a reverse mortgage on a home they own together, or one spouse can take out a reverse mortgage in their name alone. If you're getting divorced and you o𝔍r your spouse has a reverse mortgage, you have a few options—you can sell the property to pay off the loan or refinance the reverse mortgage so one borrower can keep the home.

How a Reverse Mortgage Works

A 澳洲幸运5开奖号码历史查询:reverse mortgage is a special type of loan that allows eligible homeowners to withdraw equity from their homes. Reverse mortgages administered and overseen by the 澳洲幸运5开奖号码历史查询:Fede🉐ral Housing Administration (FHA) are known as 澳洲幸运5开奖号码历史查询:home equity conversion mort🦋gages (HECMs).

A reverse mortgage isn’t the same as a traditional 澳洲幸运5开奖号码历史查询:home equity loan or 澳洲幸运5开奖号码历史查询:home equity line of credit (HELOC). With either of those options, the home acts as security for the loan, and you’re essentially getting a second mortgage on the property. You make monthly payments to the lender according to the terms and schedule set by the loan agreement. If you default on a 澳洲幸运5开奖号码历史查询:home equity loan or HELOC, the lender may initiate 澳洲幸运5开奖号码历史查询:foreclosure proceedings against you to recover what’s owed.

In a reverse mortgage agreement, the lender makes payments to the homeowner each month. No payments are required from the homeowner. In🥃stead, the amount of equity that has been borrowed must be repaid when the borr🌃ower:

• Sells the home
• No longer uses the home as their primary residence (for example, if they move into long-term nursing care)
• Passes away

Reverse mortgages can offer couples a steady stream of income during their lifetime, but it’s not free money. Interest and fees will accrue, increasing the balance owed when it’s time to repay the loan.

Reverse Mortgages and Divorce

How a reverse mortgage is treated during a divorce proceeding can depend on w🐠hether either spouse wants to maintain ownership of the home and who is listed as the borrower. Typically, divorci🧜ng couples have one of three options to choose from:

• Sell the home and use the proceeds to pay off the reverse mortgage balance, then split any remaining funds using an agreed-upon percentage.
• If both spouses are listed as co-borrowers, one spouse can choose to remain in the home, and nothing is payable until they no longer use the property as their principal residence. However, they may be required by their divorce decree to pay out an appropriate portion of the home’s equity to the other spouse.
• If one spouse wants to keep the home but is not listed as a co-borrower, they may choose to refinance the reverse mortgage into a new reverse mortgage or another type of home loan. Again, this might necessitate paying out a portion of the home’s equity to the other spouse.

Of these options, selling the home might be easiest unless both spouses are listed as co-borrowers. When each spouse is named on the reverse mortgage as a borrower, one can remain in the home without having to pay anything, even if the other spouse moves out. However, a reverse mortgage can’t be put off indefinitely. At some point—specifically, once the remaining co-borrower sells the home, moves out, or passes away—the balance must be paid in full.

Using a Reverse Mortgage to Settle Divorce

In so꧙me cases, one spouse may take out🐻 a reverse mortgage to satisfy financial obligations to the other spouse. For example, say you and your spouse decide to divorce, and you want to remain in the home that you own together. As part of the settlement agreement, you must give your spouse $100,000 to “buy them out” of their share in the home.

If you don’t have $100,000 in cash or would rather not hand over a large share of your liquid assets, you could take out a reverse mortgage instead. You can s♓elect a lump sum payment option and use the funds to pay off your spouse. The reverse mortgage debt wouldꦆ not be payable until you sell the home, move out, or pass away.

However, it’s important to keep in ꦦmind that not everyone will qualify for a reverse mortgage. For example, if you’re interested in getting an HECM, you must:

• Be age 62 or older
• Own the home outright or have paid down at least 50% of the mortgage
• Occupy the property as your primary residence
• Not be delinquent on any federal debt
• Have financial resources to pay property insurance, taxes, homeowners insurance, and upkeep
• Attend a United States Department of Housing and Urban Development (HUဣD)-approved consumer counseling session

You’ll also need to satisfy the lender’s 澳洲幸运5开奖号码历史查询:credit score and income requirements to qualify for a reverse mortgage.

The Bottom Line

Reverse mortgages can provide a supplemental income stream for couples and 🅷divorced individuals in retirement. Before ta🅰king out a reverse mortgage, it’s important to understand the eligibility requiremen♓ts and your financial obligations if you decide to sell the home or move out. It’s also good to compare the best reverse mortgage companies to find the right option to fit your needs.